Economy

Bill Morneau planning cautious budget for March 22 as he waits on Trump

Bill Morneau’s second budget will be short on new spending and will include what amounts to a “down payment on the innovation agenda,” as the finance minister takes a wait-and-see approach over the uncertainty surrounding U.S. President Donald Trump’s economic agenda.

A senior government source said this budget will set the stage for what could effectively be a two budget year, with a significant fall fiscal update that would be able to factor in the full implications of the coming U.S. Budget.

Morneau announced in the House of Commons today that he will deliver his budget on March 22. The expectation was that it would be a so-called “innovation budget” — outlining the beginnings of a plan to re-engineer the Canadian economy — but government officials have been keen to tamp down those expectations in recent weeks.

“We want to move forward on our agenda and continue to be ambitious in helping Canadians,” Morneau said in the foyer of the House of Commons, adding that he is “confident” he can do that while remaining fiscally responsible.

“We know that the measures we put in place in Budget 2016 made a real difference for middle class Canadians, we can continue that going forward,” he said. (Source: CBC News)

As Justin Trudeau praised U.S. ties in his debut remarks at Donald Trump’s White House, the Canadian prime minister’s top diplomat nodded along in the front row with barely a glance at her boss.

March 27, 2015

Instead, Foreign Minister Chrystia Freeland’s eyes were fixed squarely on Trump, as if imploring him to let each of Trudeau’s words sink in: common goals, bilateral trade, middle-class jobs. The president soon caught her eye and nodded.

Trudeau left Washington Monday with as much as he could hope for. Trump pledged publicly to only “tweak” Canada’s side of the North American Free Trade Agreement and ease the flow of goods along the northern border, while saying he’d focus instead on the “unfair” U.S. commercial relationship with Mexico to the south.

In private, the president gave no indication of how he’d proceed on NAFTA talks or whether he’d press ahead with a border tax, according to a senior Canadian government official who spoke after the meeting on condition they not be identified. It was the clearest signal yet that Canada — and the US$541 billion in bilateral trade of which it’s a part — isn’t in U.S. Crosshairs.

September 26, 2001

“Trudeau did very well today,” Christopher Sands, director of the Center for Canadian Studies at Johns Hopkins University, told Bloomberg TV Canada Monday. “Trump made some important distinctions between Canada and Mexico. That’s reassuring for markets.”

The whirlwind visit lasted roughly nine hours. The two leaders spent four together before the prime minister’s meetings with House Speaker Paul Ryan, R-Wisconsin, and Senate Majority Leader Mitch McConnell, R-Kentucky. Trudeau’s ministers also met with Vice President Mike Pence, and the prime minister’s senior aides met with their counterparts in Trump’s office, including Stephen Bannon and Jared Kushner.

Trudeau headed into the meeting biting his tongue on issues like refugee rights to instead focus almost exclusively on trade. Canada’s relationship with the superpower to its south largely consists of selling resources to Americans and buying goods in return. According to a report this month from the Bank of Nova Scotia, Canada ran a $303 billion deficit in manufactured goods with the U.S. between 2009 and 2015, and a surplus of $453 billion in energy and resource products. Mexico runs surpluses in both categories. (Source: Financial Post)

Trudeau’s chief of staff Katie Telford, his principal secretary Gerald Butts, Canada’s ambassador to Washington David MacNaughton, Foreign Affairs Minister Chrystia Freeland, and Brian Clow — who heads the recently established “war room” in the prime minister’s office devoted to co-ordinating all Canada-U.S. issues — travelled to Washington, D.C., and New York City to meet Trump officials last week. (Source: Huffington Post)

Finance Minister Charles Sousa delivers fall economic statement

The Ontario government is moving to double the maximum tax rebate offered to first-time homebuyers while boosting the land-transfer tax on house purchases above $2 million.

Finance Minister Charles Sousa made the announcements in his fall economic statement, delivered in the provincial legislature on Monday afternoon. The changes are to take effect on Jan.1, 2017.

“Purchasing your very first home is one of the most exciting decisions in a young person’s life, but many are worried about how they will be able to afford their first condo or house,” he told the Legislature Monday. “Improving housing affordability will help more Ontarians to participate [in the housing market].”

November 8, 2013

Sousa said first-time buyers won’t pay any land transfer tax on the first $368,000 of a purchase price, and they will become eligible for a rebate of up to $4,000 in provincial land transfer tax, levied on the purchase of every house and condominium. Meanwhile, the land-transfer tax rate on the amount of a purchase above $2 million will rise to 2.5 per cent, from the current rate of 2 per cent.

Government officials say the tax increase on luxury homes will bring in about $105 million annually, and that will fund the increased rebate.

New Democrat finance critic Catherine Fife called the fall economic statement “a distraction” from the top issue facing Ontarians — soaring electricity rates — and said Premier Kathleen Wynne had downplayed expectations of help for first-time homebuyers.

“Quite honestly, she was right to lower the expectations because what we see in this statement is neither new or profound or progressive,” Fife told the legislature. (Source: CBC News)

Trudeau called Trump on Wednesday night to congratulate him on his election victory, and the two discussed “various areas of mutual interest.”

“It was a brief call, but it was a strong beginning to what is going to be a constructive relationship,” Trudeau said during a news conference in Sydney, N.S., this morning.

Asked by reporters how he would explain to children that a “sexist, racist, bully” was taking office, Trudeau stressed the need to promote a strong working relationship with anyone who the American people elect.

It’s important to work constructively with whomever is president because “that’s what Canadians expect,” he said.

“Canadians expect me to stand up for Canadian rights, Canadian opportunities, Canadian jobs and Canadian values,” he said. “And I will do that in a way that continues to do that in a way that continues to benefit our country and its position in the world.”

Trudeau said Trump expressed “warmth” for Canada during the call.

It has become a tradition that the first foreign visit by a U.S. president is to Canada. According to the Prime Minister’s Office, Trump also extended an invitation for Trudeau to visit Washington.

No details were provided on when either visit could take place.

Trudeau’s telephone call came after he met with some of his senior advisers and cabinet ministers, who discussed the tone and approach the prime minister should take in the debut meeting with Trump. (Source: CBC News)

Fiscal update boosts Liberal infrastructure plans but offers no path back to balance

Justin Trudeau’s Liberal government is responding to the sluggish global economy with a fall economic update that puts a even greater focus on infrastructure spending than in its spring budget, while making it easier for private sector investors to add their money to the government’s already considerable funding pot.

While the projected deficit for 2016-17 has moved down to $25.1 billion from the $29.4 billion forecast in the spring budget, the new figure no longer has any kind of a safety cushion built in. Absent that cushion, the deficit has actually grown thanks to some $1.7 billion in new spending since last spring.

The deficit situation improves toward the end of the government’s five-year horizon, to $16.8 billion in 2020-21. The projected debt-to-GDP ratio — the key measure of the affordability of a government’s debt — by then returns to the 31 per cent mark, where it was in 2015-16 as the Liberal government took office.

Morneau told reporters his government made the right decision in preparing itself for what is happening to the economy.

But Interim Conservative leader Rona Ambrose said the Liberals’ massive spending has created no new jobs and has led to a stalled economy.

“They think this failed plan is somehow working, and they’re doubling down on it,” she said.

Repeating the party’s line that the Conservatives are the voice of taxpayers, Ambrose accused the government of “making lives more expensive for Canadians.”

“Canadians are worse off today than they were a year ago,” Ambrose said. “But instead of action, we hear excuses.” (Source: CBC)